Labour Mismanagement Hitting Households
The SNP has warned that the Labour UK Government’s damaging mismanagement of the economy will mean higher costs for families, businesses, public services and the UK as a whole.
It comes as the UK’s long-term borrowing costs hit the highest levels in more than 25 years, and more businesses warn of looming price rises.
This has been followed by reports that, in response to their own fiscal mismanagement, the Labour government is now threatening a return to severe austerity cuts, with the welfare budget ‘top of the list’. The SNP has challenged the Chancellor to immediately rule out such a devastating return to austerity – pointing to Anas Sarwar’s pre-election assurance: “Read my lips: No austerity under Labourā.
Amid the ongoing fallout from the UK budget, the yield on the 30-year gilt reached 5.22% today – eclipsing the levels reached during the height of the market fallout from Liz Truss’s disastrous mini-Budget and hitting the highest levels since 1998.
At the same time, high street retail chain Next announced it will raise prices on clothing as a result of the Labour government’s National Insurance tax hike. The move followed warnings from the British Chambers of Commerce (BCC) that more than half of UK businesses are planning to do the same in the coming months, with business confidence sinking to its lowest level in two years.
A leading survey of business activity, S&P Composite Purchasing Managers’ Index (PMI), has also found UK manufacturing and service sector businesses shed jobs in December at the fastest pace since January 2021. Separate figures from an association of recruitment agencies shows demand for new staff has fallen by the most since August 2020.
Labourās straitjacket on tax, their hike in employersā national insurance, and their refusal to rejoin the EU single market have all stifled growth which we so badly need.
— John Swinney (@JohnSwinney) January 10, 2025
They ignored every warning, and now we are all paying the price. https://t.co/g0sNOhWaFr
And a Bank of England survey of more than 2,000 businesses shows 61% of companies expect reduced profits in 2025. More than half (54%) plan to increase prices, around the same amount (53%) expect lower employment, and four in ten (39%) are planning reduced pay rises for their workers following the Labour Party National Insurance tax hike.
Critically, the UK food industry has joined the list of sectors warning that prices in shops, supermarkets, cafes and restaurants will rise throughout 2025.
The British Retail Consortium (BRC) has now warned the National Insurance tax hike will mean there is “little hope” of food prices “going anywhere but up” in the second half of 2025, with the costs passed onto consumers as the SNP and others warned ahead of the UK Budget. The BRC has forecast that food price inflation will rise from last month’s 1.8% figure to 4.2% in the latter half of 2025 – with vegetable oil, orange juice, butter and coffee among the goods increasing in price.
Meanwhile, Tesco said the tax hike will add Ā£250 million to its business costs, and Marks & Spencer said the combination of higher costs from the tax hike, coupled with poor economic growth, inflation and interest rates, is causing uncertainty.
This all reflects growing fears of stagflation in the UK economy on Keir Starmer’s watch – with concerns among economists that the UK faces a toxic combination of stagnant economic growth, rising prices and increased unemployment.
Labour does not have a real plan for the UK or Scottish economies, and that is becoming increasingly evident.
GRAEME
The notion that things could only get better will be seen by the electorate for what it was as people continue to feel the squeeze.
It is damning that Labour have brought us to a position even worse than that created by the disastrous mini-budget of Liz Truss and Kwasi Kwarteng, and the SNP is clear that the fallout must not fall on the vulnerable and public services.
We face the prospect of real economic troubles and Labour are grasping for an answer – that answer cannot be a devastating return to austerity.
The spike in the governmentās borrowing costs – notably the rise in the yield on 30-year gilts to a 27 year high – is all about investorsā diminishing confidence in the UKās growth prospects. It risks pushing the UK into a vicious downward spiral, because the higher borrowingā¦
— Robert Peston (@Peston) January 7, 2025
Labour promised change but it is now looking like they have lost control.
DAVE DOOGAN MP, SNP ECONOMY SPOKESPERSON
Public services and the most vulnerable mustnāt pay the price because the Labour Chancellor has lost control of the public finances.
Rachel Reeves must immediately rule out a devastating return to austerity. She has already targeted pensioners with her cuts – those who need social security support canāt be the next target of her austerity agenda.
Before the general election Keir Starmer and Anas Sarwar told us – “Read my lips: No austerity under Labourā. That promise is now going to be put to the test.
Voters were promised better times but instead the UK economy is flatlining, prices are rising, energy bills are soaring, and borrowing costs are through the roof.
Brexit Britain is broken and Keir Starmer’s failing government is making things even worse. The Prime Minister and the Chancellor must urgently get a grip and take action to put the economy back on track instead of forcing families and public services to pay the price because of the economic damage they inflicted in their autumn budget.
